Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I put on the record that, after due and proper consideration, the government are not in a position to accept this amendment. Like Senator Murray, we do not believe in hypothecation. I think it is a very bad principle of government and one to be resisted at all costs.

One of the principal reasons for selling Medibank Private is that we do not think taxpayers should have moneys at risk in this business. It should be seen as an investment, as Telstra was. Taxpayers had huge sums of money tied up in a telephone company and, at the moment, taxpayers have a not insubstantial amount of money tied up in a private health insurance business, which, at least in theory, is at risk. And, as Senator Nettle reminded us, it is a business that lost money and required taxpayers to improve its capital adequacy two budgets ago. That is the fundamental reason: we do not think that money should be invested in a private health insurance business; it should be used elsewhere.

We also strongly agree with Senator Murray, unlike the former Labor government, that proceeds of assets sales should not be used for recurrent expenditure. That was what the former Labor government did with the proceeds of the asset sales it presided over: it stuck them straight into recurrent revenue. That is like selling the silver to go out to dinner. It is a completely and utterly irresponsible approach. Up until now, we have used the proceeds of asset sales to reduce government debt. Rather than put it into recurrent expenditure, we have used asset sales to get rid of the debt we were left. That was the appropriate and responsible action on the part of the government: to reduce the debt burden facing future generations and reduce the annual interest payments upon the debt, which were the equivalent of the expenditure on defence when we came into office.

So we are now in the luxurious position, rare among Western governments around the world, of not having any net government debt. We have the luxury of considering what to do with the proceeds of asset sales because we have been so successful in removing the debt, which had been the repository of previous asset sales. We have said that, with respect to the Future Fund, sources of future deposits into the Future Fund will be made on a discrete basis. A discrete decision will be made on an annual basis with respect to surpluses and on an individual basis with respect to asset sales as to whether those proceeds should go into the Future Fund. On the face of it, the appropriate place to put future surpluses and proceeds of asset sales is indeed into the Future Fund, up until the point where we believe it has the requisite deposits, in order to ensure it can meet the unfunded superannuation liabilities which we all know exist.

But we will make that decision as and when we have proceeds available. We have made that decision with respect to the proceeds of T3—all of those proceeds are going into the Future Fund. With respect to Medibank Private, we will make a discrete decision as and when the proceeds materialise. However, in the meantime, and as a direct consequence of the government’s policy to sell this business, we have announced that, as a result of this sale in this year’s budget—which seems to have passed the notice of some senators present—we have appropriated additional funding of $500 million over four years for research grants for the National Health and Medical Research Council. That was a formal government decision and was part of the appropriation bills, which have been considered by this chamber. So that is in law, in writing, a done deal, a decision made by this government as a direct result of the decision to sell Medibank Private. In anticipation of the proceeds of the sale, we have enhanced medical research to the tune of $500 million over the next four years.

In addition to that we have, in anticipation of sale proceeds, in the budget this year provided $170 million over nine years for the establishment of an Australian health and medical research fellowship scheme. I do not describe that as hypothecation per se but I do proudly proclaim it as a decision made by the government because we have made the decision that we will sell this business and not have whatever it is worth tied up in that business. It therefore gives us the opportunity to make these additional investments in health and medical research. These are decisions we would not have made if we had made a decision to hang on to this business. So, while it is not hypothecation, it is a decision to invest additional funds into medical research that do flow from the government’s anticipation of proceeds from the sale of this business.

The actual proceeds, as and when they materialise, will be the subject of a separate and discrete decision, which of course will be reported in full to the parliament and the public and the subject of public defence and justification. But we will not use the proceeds for recurrent expenditure, which, as Senator Murray properly pointed out, is not a good policy.

I would just say in relation to infrastructure per se that the Commonwealth government does not own any health or medical infrastructure directly. We do not own or operate hospitals. We do not own or operate medical research institutes directly. We do fund, on a recurrent basis, the states in their ownership and operation of hospitals and we do fund, on a recurrent basis through the National Health and Medical Research Council, private and public health and medical research institutes but we do not own any infrastructure. So there is no infrastructure of our own that we can invest in. So, as I say, we should look at the proceeds of the sale as an investment.

I for one will certainly want the cabinet to consider seriously these proceeds going into the Future Fund because I do think the most important responsibility we have is to ensure the unfunded liabilities that face the nation are met. The Future Fund is the way in which to do that. The fund is supported by this parliament and prima facie that is, in my view, the appropriate place for the proceeds of this sale to go, but that will be a decision made by the government at the time the proceeds materialise. So for those reasons we are not in a position to support this amendment.